Is it worth being ripped off?

We all love beautiful things. Stylish things, tasteful things, original things, made by highly skilled craftsmen from the highest quality materials. Items that are so completely and obviously superior to their mass-market equivalents that people will pay top dollar for them. Not everyone can afford them, but that's why work from the top design houses commands so much status. Is it worth the astronomical price tags? For some it's a “definitely”. Is it worth being ripped off for? No. Never. And the short-sighted avarice of many luxury goods importers in South Africa is strangling the golden goose.

The kind of people who make enough money to afford designer apparel typically didn't get there by being fools. When wealthy overseas tourists walk into one of the top-end designer shops at the V&A Waterfront and see a gorgeous handbag, and notice that it's more expensive than back home, they're going to be a little put off. When that handbag is almost double the price (184%!) at the V&A than in London, they're going to walk straight out again, with a fundamentally negative view of shopping for luxury goods in our country.

This is exactly what is happening right now.

When we set up the Paul Smith stores in South Africa, we did a survey of items available at several of the first-tier clothing brands at the V&A, and compared them with their equivalent prices in London. One handbag — 184% more. A cotton shirt — 44% more. Suit — 72% more.

We compared South African prices not with “cheap” countries, but the UK, France and Germany. While the local importers of these brands still find enough suckers, they're doing terrible damage to the local luxury goods market by overpricing.

In South Africa, only the wealthiest can afford top brands. In Europe, only the wealthiest can afford to wear top brands, but many more people will stretch their wallets for a few beautiful items. Luxury brands are more pervasive in Europe than they are here, but there is an ever- increasing appetite among South Africans for really high-quality designer wear. This is partly because of globalisation, but also due to changing spending patterns in South Africa. We are starting to appreciate the quality and style inherent in luxury brands, and are prepared to commit an increasingly larger slice of our wallets and purses to luxury items.

Many retailers in South Africa's luxury goods markets are sacrificing long-term volumes for short-term profits; sacrificing the establishment of their brands in the South African retail market for obsession with status; sacrificing the love of quality and style on the altar of pretension.

There is no practical justification for the policy of overcharging in South African luxury brand operations. While we do have higher transport costs and import duties than our global peers, our shop fitting costs, rent and salary bills for sales staff are commensurately lower than European operations, along with many of the taxes they face.

We need to build up the top designer brands so that South African consumers don't only admire them, and don't only aspire to them, but also actually start to adopt them.

If our higher-end consumers understand and appreciate what craftsmanship and sophistication goes into these garments and accessories, their expectations will be raised of what “quality” means. We need to extend these fine brands so that they're a greater part of our lives, with greater adoption by more people.

By charging internationally competitive prices, we're hardly cheapening the brand — this is still a very limited, premium segment market.

But the local practice so common in South Africa of seeing just how high you can stretch your prices is not good business sense. It damages the credibility of the brand in terms of its value proposition, it artificially limits the market and it insults our customers. They didn't get where they are by being fools, and the practice of playing a game of “chicken” with their egos (and cheques-books) is almost terminally short-sighted.

Source: Business Times

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